Russian ruble recovers after S&P downgrade

The ruble has made a 2.5 percent comeback after losing more than 5 percent after S&P downgraded Russia’s sovereign credit rating to ‘junk’ status.

The currency hit a 6-week low late Monday after the ratings
agency announced it had cut Russia’s credit rating to BB+ from
BBB-, the threshold between ‘investment grade’ and ‘speculative
grade’. It was the first ‘junk’ rating for Russian debt since
2004.

The downward shock to the ruble was partly caused by the 1
percent retreat in oil, as the Russian economy is dependent on it
for more than half of its exports. Oil prices, as well as
sanctions and the Ukraine conflict, have all hurt the Russian
currency. EU leaders meet on Thursday to discuss possible further
economic sanctions against Moscow.

The ruble has lost more than 13 percent of its value since the
beginning of this year and more than 46 percent in 2014. Russia’s
central bank spent $88 billion of its foreign currency reserves
last year trying to stop the ruble’s steep slide.

The rate against hard currencies improved on the opening of
trading on the Moscow Exchange, as the ruble appreciated to 67.05
per dollar and 75.92 to the euro. Russia’s stock market was
closed when the S&P made the announcement late Monday
evening.